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TORONTO - Finance Minister Jim Flaherty says the Canadian economy is facing a variety of economic challenges, but has so far remained resilient.

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The Canadian Press

The Canadian PressFinance Minister Jim Flaherty stands to speak during question period in the House of Commons on Parliament Hill in Ottawa on Tuesday.

"Certainly there has been a psychological effect of the recession in the U.S. housing sector, but keep in mind Canadian projections are on the positive side of the ledger," he told the Economic Club of Toronto in a speech Monday.

Flaherty acknowledged that Canadians face rising costs, including food prices and higher airline fees tied to fuel. But he said Canada hasn't seen the same type of inflationary impact that other countries have experienced.

"Canadians and Canadian businesses have been resilient in the face of economic adversity," he said.

"Canada has been relatively protected from the inflationary trend elsewhere because of the relatively high Canadian dollar which affects, positively, the price of imports."

The soaring loonie has had made importing cheaper but has also hurt Canadian manufacturers exporting goods, especially to the U.S.

Ontario has suffered major setbacks from slowing exports, and appears positioned to shift to a "have-not" province as Newfoundland and Labrador prepares to stop receiving federal equalization payments.

The finance minister has been outspoken on the province's troubled economy, and has rejected Ontario's claims that it's the equalization funding formula that's flawed and not the province's corporate tax policies.

"We want Ontario to remain a key engine of the Canadian economy. It's not in anyone's interest to see the country's most populous province slip into have-not status," Flaherty said.

Flaherty also spoke positively about the latest jobs numbers, released last Friday, calling them "promising."

Canada's employment grew once again in April with the addition of 19,200 jobs, while the trade surplus jumped to $5.5 billion in March, the highest in almost a year.

"There's good reason for all Canadians to be confident. Our economy continues to grow in all regions of Canada," Flaherty said.